grenada The Grenada Goat Dairy Project, a non-profit organization dedicated to sustainable agricultural production, launched itself using kickstarter.com, a virtual platform to source crowd-funding (the term given to initiatives that encourage individuals to pledge money, usually via the Internet). Thanks to the online funding campaign, it was possible to set up a school-based dairy facility for youth development. The Grenada Goat Dairy Project, known locally as the Goat Dairy, was launched in 2008 in the wake of Hurricane Ivan to train local farmers and educate young people about the benefits of goat production as a sustainable business model. It offers trainings in animal husbandry, improved livestock breeding, development of local feedstuffs, and milk and cheese production. The project organizers developed the idea of establishing a goat farm, but the cost of USD 55 000 was beyond the budget of the Goat Dairy, which covers 70 percent of operating costs through production of its chèvre cheese, sold to local restaurants and markets. It was decided to attempt crowd-funding, despite the risks involved. The funding platform chosen applies an all-or-nothing policy: either the goal in pledges is met by the set date or it is not, in which case the investors keep their contributions.
(19) Goat cheese produced by the Goat Dairy. (20) Goat, Maxine, from the Goat Dairy.
The team produced a well-designed campaign, including a video explaining the Goat Dairy’s work and a range of rewards for people who made pledges: a donation of USD 25 would earn a “thank you” on a postcard designed by a Grenadian artist, a gift of USD 150 would give free classes at a local yoga studio, and pledges of USD 200 would be rewarded by lunch or dinner at one of the island’s top restaurants. The campaign was launched in August 2012, and there were just 45 days to meet the set goal. After a good start, donations dwindled and the Goat Dairy organizers turned to social media – Facebook, Twitter and Instagram – and contacted the local media, as well as youth organizations and consulates abroad. “We also secured a few matching fund pledges with donors who promised to match all pledges up to a given amount,” said Malaika Brooks-Smith-Lowe, Director of Public Relations. “For instance, we had a local real estate developer promise to match all pledges made within a 72-hour period up to a total of USD 5 000. This created a lot of excitement and allowed people to essentially double the value of their pledge.” The Goat Dairy raised more than the target figure, with pledges totalling USD 63 160, as well as an additional USD 2 779 given by donors who were unable to pay by credit card. Even after deductions for Kickstarter administration and payment processing, there was enough money to start building the educational goat farm at a local primary school. Work started on the facility, to be housed at St Patrick›s Anglican Public School, and was due to open in May 2013.
Through both hands-on and classroom activities, students will learn the responsibilities associated with animal care, growing their own food, composting and record-keeping. To expand its impact, the programme will network with other schools so that more children and young adults can be involved. (Case study drafted by F. Dalla Valle, adapted from CTA)
More information available at: www.thegoatdairy.org www.kickstarter.com
25. fInanCe and mentorshIP for InnovatIve Young soCIal entrePreneurs
aSia The Youth Social Entrepreneur Initiative (YSEI) was founded in 2005 as a Global Knowledge Partnership (GKP) multistakeholder partnership programme between its members – Thai Rural Net (TRN), Mitra and OrphanIT. YSEI believes in providing access to finance and guidance to young people with innovative ideas, commitment and vision for social change, so that they may emerge as social entrepreneurs and create a lasting impact. This social venture initiative provides financial support to youth in Asia. Through its emergence fellowship, YSEI invests in young visionaries with big ideas who need crucial start-up support to turn those ideas into action. Start-up support includes: financing of up to USD 15 000, development knowledge, tools for social entrepreneurship, technical consulting through mentorship and access to diverse networks. On a practical level, YSEI invests in social ventures with blended values (economic, social and environmental), ICTs and a focus on poverty reduction, improving disadvantaged/marginalized groups, environmental protection, gender equality and human rights. All ventures proposed for investment should be led by youth aged between 19 and 30.
To date, youth-led initiatives receiving YSEI support have included ventures in agriculture supporting food and nutrition security. Brinda Ayer, a young social entrepreneur from India, secured funds to start up a school and community horticulture enterprise in Bangalore in order to supplement the national midday meal scheme with an appropriate level of vegetable nutrition so as to improve overall school enrolment and child health in India. The enterprise provides nutritional
horticultural supplements produced via horticulture in polyhouses (greenhouses) and kitchen gardens placed in selected schools. Faisal Islam, from Padma Khulna in Bangladesh, used YSEI support to provide marginalized farming communities with access to an agricultural knowledge management system to improve their livelihoods. The system provides innovative knowledge and global best practices to farmers in their local language and enables farming communities to establish better resource management, access relevant information and market their produce. As a result, farmers at grassroots level are able to form links with national and global expertise while emphasizing local development needs. Other youth-led social enterprises have also been able to secure financing through YSEI in India, Bangladesh, the Philippines and Timor-Leste.
(Case study drafted by F. Dalla Valle, adapted from the Internet) More information available at: http://www.ysei.org/ http://orphanit.com/ysei.html
3.3 Conclusions
When trying to access financial services, youth from across the world face several common challenges:
> restrictions in the legal and regulatory environment; > lack of specifically tailored financial products; > limited financial capabilities;
> reluctance of FSPs to work with clients who have limited trading records and security (often the case for rural youth).
Provision of financial services allows youth to improve their livelihoods and accumulate assets in the long term. Appropriate and inclusive financial services can equip youth with the resources and support to become productive and economically active members of their agricultural households and communities, and make the transition from childhood to adulthood. Non-refundable grants, incentives and start-up capital for promoting rural youth entrepreneurship are instruments of critical importance.
In the context of MFIs in the developing world, the experience of the Grameen Bank [case 23] demonstrates that it is possible to lend to the poor, including youth with no land or collaterals of any kind. Youth are given the opportunity to purchase their own tools, equipment or other necessary means and to embark on income-generating ventures which allow them to escape from the vicious circle of low income >> low savings >> low investment >> low income.
Grouping in informal saving clubs (see the Friends Help Friends saving group in Cambodia, [case 22], can help rural youth to improve their means for generating savings and increasing their borrowing power. Support is offered to young women and men to access finance through group savings and interest, and the scheme also helps youth to build self-confidence and trust in the
group – factors which are key to its successful functioning. It provides a first contact with financial culture and can be a step towards the use of traditional financial services.
Youth-dedicated products are beginning to be offered by some commercial banks, for example, the partnership between the DFCU Bank, Stanbic Bank and Centenary Bank with the Government of Uganda and its Youth Venture Capital Fund [case 19]. Nevertheless, youth are still generally regarded by FSPs to be an excessively risky client group and, while initiatives of this kind are emerging, they remain insufficient.
Mentoring programmes provide significant opportunities, as most FSP managers prefer to see an experienced adult mentoring youth business owners to help them deal with rapidly changing trade markets (Atkinson and Messy, 2012). Appraisals undertaken in Africa showed that MFIs with strong outreach to youth had well-trained loan officers who were capable of analyzing business prospects as part of the loan analysis. Credit repayment rates for youth were in fact better than for the overall portfolio, in part because of the tighter risk control associated with their loans (Atkinson and Messy, 2012). Mentoring is also effective in helping youth gain access to markets [chapter 5, case 38].
Lowering the risk of lending to young people can be achieved through various guarantee mechanisms: risk funds (e.g. the Grameen Bank, case 23), guarantee groups (e.g. PROMER II, case 21) and other partnerships. Alternative models for providing youth with enhanced security for FSPs are needed; they require political will and more partnerships.
Start-up funding opportunities exist so that a rural enterprise may access the market, as the example in Benin [case 39] illustrates. However, funding tends to be more readily available to educated youth who are familiar with ICT tools and preferably know a foreign language. The start- up fund for agricultural activities in Canada [case 18] requires the first repayment after three years. This reduces the pressure on youth starting a business and gives them time to get established – a lesson that would also prove useful in the context of developing countries. ICTs also provide access to e-banking and crowd-funding. Crowd-funding sites were successfully used to set up the Grenada Goat Dairy project [case 24]. Such sites offer great potential to get a project started in today’s world.
Competitions are another potential source of funds, particularly those targeting rural youth, where a good business plan is evaluated and rewarded. As with MFarm in Kenya [case 33], these competitions provide the winners with increased visibility, giving a crucial boost to their business. A large number of NGOs act as FSPs for small enterprises in poor rural and urban communities, and many target youth in particular (Dalla Valle, 2012). In response to the limited financial literacy (e.g. unfamiliarity with drafting a business plan) among rural youth – particularly those in developing countries – many NGOs offer technical training related to the loan activity, support to new and existing businesses and/or programmes to improve the living environment with the objective of alleviating poverty. YSEEP in Moldova [case 20] successfully combined training with the provision of loans to launch businesses, and also managed to support young entrepreneurs with follow-up training in marketing and management. Rural youth require a wide range of financial services, not only loans or savings opportunities. The above-mentioned YSEEP and the Grameen Bank [case 23] not only provide loans, but also organize training courses on financial literacy, with support to the creation of local businesses.
The research carried out for this publication reveals that, in developing countries, a number of initiatives providing youth with access to finance are still managed or initiated by development
partners. This means that they may depend on donors for funding – a dynamic that cannot be sustained in the long run. It is therefore crucial to include governments and other national organizations in the planning process in order to ensure long-term sustainability. Governments, national financial institutions and other national organizations, as well as the private sector, have a vital role to play in the sustainability of youth-inclusive financial services, building on initiatives such as those reported in this publication. Regulatory barriers (e.g. age restrictions) to accessing loans can be overcome by creating a youth-friendly regulatory environment, acting inclusively and protectively towards youth. Such policies could encourage the design of suitable financial services for youth as well as the provision of low-cost delivery channels like mobile and school banking programmes (UNCDF, 2012).
Youth represent the next wave of clients for FSPs and now is the time to educate and include them. If youth are to benefit from an inclusive financial sector, political commitment is required, in addition to coordinating efforts among different regulatory bodies (ministries of education, agriculture, youth, finance, employment and trade), producers’ organizations, FSPs, other youth stakeholders and youth themselves.